Editorial Board
What Does China's Devaluation Mean?
A suspiciously convenient moment for China to see the merits of a market-based exchange rate.
PBOC Governor Zhou Xiaochuan means you no harm.
Photographer: Feng Li/Getty ImagesChina's devaluation of the yuan Tuesday surprised global markets and left analysts wondering what it might mean. Leaders in Beijing are probably asking themselves the same thing.
China's monetary authorities cut the currency's value against the dollar by 1.9 percent, the biggest move in years. Was this a liberalization of the country's system for managing the yuan, a step to stimulate China's flagging economy, or the beginning of a currency war? Mostly, it was a combination of the first two -- but the question now is how authorities will strike this balance between pro-market reform and pro-export stimulus.